News: Important Update on Funds Required for Trading

Market Announcements 📢
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With respect to SEBI Circular SEBI/HO/MRD2_DCAP/CIR/2021/0598 dated 20th July 2021 for Segregation and Monitoring of Collateral at Client Level please note w.e.f. 02nd May 2022, Trading Members shall be required to maintain Cash and Non-Cash Collateral in the ratio of 50:50 client level segment-wise.

Starting May 2, 2022, you will have to maintain at least 50% of funds in cash compulsorily in your trading balance. This change is due to the SEBI mandate which says that the client has to maintain at least 50% in cash margin to trade in all the segments.

For overnight positions, 50% of the margin needs to compulsorily come in cash or cash equivalent collateral (Exp- Liquid MF ETF, GSEC, SGB, etc) and the remaining 50% can be in terms of non-cash collateral margin( Pledged shares).

Delayed Payment Charges of 0.0438 % per day will be levied if any cash margin shortfall on overnight position.

We highly recommend you to maintain 50% cash or cash equivalent in your trading balance, so as to avoid any delayed payment charges.

Below transaction requires minimum 50% cash or cash equivalent:

Trading Activity Fund Requirement
Equity Delivery 50% cash/ cash Equivalent
Option Buy /Sell 50% cash/ cash Equivalent
Future Buy / Sell 50% cash/ cash Equivalent

Please refer to the example below for a better understanding:

Cash or Cash Equivalent = 125000/-
Non-Cash Collateral = 300000/-
Total Limit on Dhan = 425000/-
Margin used = 400000/-

For the above transaction to be processed, the client needs to have minimum cash or cash equivalent to be Rs.2,00,000/- ( 50% of Rs.4,00,000/-), but we can see that client only has Rs.1,25,000/- cash balance.

So in this scenario, clients will be charged an Interest on the remaining shortfall of Cash Margin ie: Rs.75,000 ( Minimum Cash Required (Rs.2,00,000/) minus Available cash (Rs.1,25,000/-))

Per day Interest charged will be: 0.0438%

So the interest charged will be:

75,000 * 0.0438% = Rs.32.85 per day

Hope this helps.

Regards,
Kuldeep Mathur
Risk

3 Likes
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@kuldeep for cash equivalent we need invest in money market fund - can you bring direct mutual fund pledging system as soon as possible -

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@kuldeep Plz do draw an example to understand better

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@kuldeep ,

Do you allow colletral to be used even for equity delivery?

So, if I pledge Infosys shares of worth 10L then I would need only 5L cash to buy another 10L of Infosys for delivery, right?

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Hi @amit yes you can used collateral for Delivery buying in Equity segment.

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We are considering direct mutual funds as a product option. Think there was some to & fro on pledging for mutual funds, hope that gets solved and some clarity is available.

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Hi,

I have couple of questions.
1.Can we have a list of what all comes in cash equivalents?
2. Will intra day f&o will also require 50% cash/cash equivalents?
3. Are sovereign gold bond pledged collateral considered as cash equivalents?

3 Likes
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Hi @gudiya, Answers to your questions

  1. Yes, we will publish this list for clarity, most of our systems are integrated and real-time, but we understand the need for this.
  2. Yes, intra-day will also need 50% cash/cash equivalents. But in this case for intraday, there are no interest charges for our users.
  3. Yes, it can be.
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Hi,
Thanks for the answers.
I got confused by the second question answer.

If on intraday it 50% cash/cash equivalents is required, then either it allows the trade or reject the trade. Where is this interest coming into picture? Would you please elaborate on this point for better understanding.

Thanks

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Here is a link to the list: Dhan: Collateral Cash Equivalent for Margin Utilisation - Google Sheets

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No…@kuldeep is wrong. You need 100% for CNC and may be 50:50 for equity intraday.

1 Like
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Make. Separate sheets for cash and non cash components.

Make groups like , ETFs, GSEC, LIQ FUNDS, SGB, debt/equity etf, gold etfs, bonds etc

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So, if I pledge Infosys shares of worth 10L then I would need only 5L cash to buy another 10L of Infosys for delivery, right?

yes you can used collateral for Delivery buying in Equity segment.

hey @dhantrade ,

Seems like amazing offer from Dhan - as per the above example, through pledging workflow one can buy 20L worth of Infosys from total of 15L cash.

:money_mouth_face:

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Hi @Shylaja ,

We have updated the post with an example. Hope it helps.

Thanks for suggesting the example idea, we realised this will help a lot of community members in better understanding of the concepts and hence added to the post

1 Like
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Hi @amit you can take delivery of 10 Lac on 10 lac pledge and 5 lac cash , no interest will be calculate on margin required but you have to make payment of remaining 5 lac within T+2 days to Avoid DPC on Ledger debit.
Debit of 5 lac can be carry up to the T+6 days , on T+7 days RMS will liquid holding up to 5 lac ledger debit.

1 Like
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I see @kuldeep.

This explanation brings more clarity now!

:+1:

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Hi @dhantrade
Explanation -
you can take delivery of 2 Lac on 1 lac pledge and 1 lac cash , no interest will be calculate on margin required ,but you have to make payment of remaining 1 lac within T+2 days to Avoid DPC on Ledger debit.
Debit of 1 lac can be carry up to T+6 days , on T+7 days RMS will liquid holding up to 1 lac ledger debit.

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  1. What about T+1 settlment(India to move to T+1 settlement from Friday: Here's what it means | Business Standard News)?

  2. Which part you liquidate if I have 1lac HUL shares and 1lac LIQUIDBESS/SETF10GILT both pledged? Either case client may not want to liquidate his holdings because of non guaranteed price fluctuation.

  3. Again you have to give last notice on T+6 day to client either fund your trading account immediately or we will liquidate your holdings. Even after liquidation broker is not sure will get all deficit amount because sell price is not guaranteed.

So in my honest opinion its good to collect 100% margin money upfront from client for equity delivery. Other brokers do the same.

1 Like
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Hello, do you allow gsec to be pledged, i have gsec in my zerodha Demat, i will transfer if the facility of gsec pledging is allowed in dhan please advise

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You can get a swifter response if you send a message to customer support and ask them about your query directly.